Consistency in income classification and depreciation on temporary business structures upheld for the assessee on both claims.

Rental receipts from the property remained assessable as income from house property because they had consistently been so assessed in earlier years and no material change in facts justified recharacterisation as business income; the standard deduction under section 24(a) was therefore allowable. Depreciation on the temporary structure was also allowable because the expenditure was incurred to make the office premises more suitable for business, and the record did not show that it resulted in an enduring or capital asset. The additions were deleted and relief was granted on both claims.

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Issues: (i) Whether rental receipts from the property were assessable as income from house property and the assessee was entitled to deduction under section 24(a); (ii) Whether depreciation claimed on the temporary structure was allowable.

Issue (i): Whether rental receipts from the property were assessable as income from house property and the assessee was entitled to deduction under section 24(a).

Analysis: The property had consistently been assessed in earlier years under the head income from house property, and no material change in facts was shown to justify a different view. The Revenue did not give any reason for recharacterising the rental income as business income. In these circumstances, the settled principle of consistency applied, and rental receipts from the property retained their character as income from house property, making the standard deduction admissible.

Conclusion: The issue was decided in favour of the assessee, and deduction under section 24(a) was held allowable.

Issue (ii): Whether depreciation claimed on the temporary structure was allowable.

Analysis: The expenditure was incurred to make the office premises suitable for carrying on business more efficiently and effectively. The material on record showed construction of a temporary structure, and there was no finding that the expenditure resulted in an enduring asset or a capital asset. In the absence of such a finding, the claim could not be disallowed merely on conjecture about permanence.

Conclusion: The issue was decided in favour of the assessee, and the depreciation claim on the temporary structure was held allowable.

Final Conclusion: The additions made by the lower authorities were deleted and the assessee obtained relief on both disputed claims.

Ratio Decidendi: Where an income stream has consistently been assessed under a particular head in earlier years and no material change in facts is shown, a different classification cannot be adopted without justification; similarly, expenditure on a temporary business structure is allowable when it does not bring into existence an enduring or capital asset.

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